If you have poor credit, you may be tempted to search for no credit check loans to try to bypass the need for a check on your credit rating. However, there are other alternatives out there for you. In this post, we will be talking about no credit check payday loans, whether they should be an option for you, and the alternatives. Hopefully, this will help you decide which credit solution is best for your needs.
What Is A No Credit Check Loan?
With this type of loan, the lender may advertise that they perform no checks to offer loans for people with bad credit. You may also see them branded as 100% approval or guaranteed loans, implying that there are no restrictions on applying whatsoever. While these may sound tempting, especially if you have a particularly damaged rating, they really should be avoided. Reputable lenders should always perform a check on your application, whether it’s a full credit check or for affordability, to ensure you will be able to make repayments. Offering no checks at all is reckless and this type of loan could leave you in further financial difficulties.
The Rules on No Credit Check Loans
The FCA regulates the financial industry in the UK, and they say that firms must undertake a ‘reasonable assessment of the creditworthiness of a customer before… entering into a regulated credit agreement.’ A creditworthiness assessment will be jointly based on information supplied by the consumer and, where necessary, a credit reference agency. The main objectives of the FCA are:
- To secure an appropriate degree of protection for consumers
- To protect and enhance the integrity of the UK financial system
- To promote effective competition in the interests of consumers
Any company approving loans with no credit check would not be operating within the FCA guidelines as mentioned above, which are in place to protect customers.
Alternatives To No Credit Check Loans
If you have poor credit and need a way to secure much needed cash, there are plenty of alternatives available to you. Some of these include using a comparison site to find lenders who offer reasonable deals. Their offerings could include guarantor loans or loans specifically designed for bad credit with affordability checks.
You could also consider using a credit card. If you find a card the offers a 0% interest period, you may be able to cover any purchases and pay them off before any interest has accumulated. By using a credit card and paying off the debt before it builds, you may also see a slight boost to your credit score.
If there is a local credit union in your area, you could apply to become a member. The maximum interest rate a credit union can charge is 12%, but many have rates that are significantly lower. They are interested in helping their members with their financial difficulties as much as possible, so may be helpful if you have poor credit. But if you tried all of these options, your last resort could be personal borrowing. If you have a trusted friend or family member, they may be willing to offer the cash you need, but you should draw up a contract and discuss possible interest rates to make them feel more confident.
Related Reading: How to Use Your Free Weekly Credit Report